HARRISBURG -- The state wants to collect your taxes:

Not just your state taxes, which makes perfect sense, but also some of your local taxes, such as the earned income tax now collected by your elected tax man, or the school district, or some firm like Berkheimer Associates.

The state wants to do that now and thinks it can do it better than the local guys.

The local guys disagree.

At a hearing yesterday to discuss proposed reforms to Pennsylvania's earned income tax collection system, officials with the departments of Revenue and Community and Economic Development argued that municipalities are missing out on $100 million in revenue, "lost" to a structure that is inefficient and fragmented.

A report issued by the Governor's Center for Local Government Services estimates that, statewide, it costs $51 million in overhead to collect the local income taxes, which themselves total $1.7 billion. It says the state Revenue Department could do the same job for about $17 million, not including $18 million in startup and transition costs.

"Significant consolidation is appropriate," said Ken Klothen, a deputy secretary with the Rendell administration. The local earned income tax collection duties should be performed by the state or, failing that, the counties.

The timing might be right for such a consolidation, the Revenue Department says, because income tax collection is about to get even more muddled.

The state's new gambling law allows school districts to take part in the slot machine windfall, as long as they reduce property taxes and increase their earned income tax rates. If a district doesn't have an earned income tax, it must enact one of at least 0.1 percent.

But hold on. A group of tax collectors called PEITOAC -- the Pennsylvania Earned Income Tax Officers, Administrators and Collectors -- opposes a statewide consolidation, and believes the local collectors are more efficient than the state.

"The $100 million revenue loss seems grossly overstated," the group said in written testimony.

In fact, municipalities would have lost $126 million, not gained $100 million, if the state had been allowed to collect local earned income taxes, according to the group's own findings, based on 2002 income data.

That's because, if the wages of every Pennsylvanian who is subject to a local income tax were added up, the local collectors actually taxed $600 million more income than the state did.

In other words, the mishmash of local collectors did a better job than the state would have.

Why the differing conclusions? Part of the confusion lies in the difficulty of establishing what is taxable income, who lives where and which households owe money to which taxing district.

Local earned income taxes aren't unique to Pennsylvania, but they are nearly so. Only 11 other states allow local agents -- that is, school districts and municipalities -- to levy income taxes. In Pennsylvania, there are 2,878 local income taxes, more than in the rest of the states combined. And the taxes themselves come in varied shapes and sizes -- the lowest rate is 0.28 percent, while the highest, Scranton's, is 2.4 percent.

Whether they were in favor of, or against, a full consolidation, all who testified yesterday agreed that the system could be more efficient and less confusing and needed reforms.

They all favored the core elements of Senate Bill 292, which could reduce the number of local tax collectors from 560 to 300, and would set new fines for collectors who don't follow the rules.

They also agreed that changes must be made to the state's "earned income tax register," a computerized list of taxpayers.

That's because the most elemental aspect of a tax collector's job often proves to be the most difficult: finding out where, exactly, people live. Doing so is difficult because a person's mailing address does not always match the physical location of his home. A person can have a Pittsburgh ZIP code, for example, but live in Mt. Lebanon or some other municipality and school district.

As a result, taxes can be wrongly withheld from an employee, or the business can send the money to the wrong town.

A new registry, updated with "geocoding" software, would improve things. You could type in a person's home address, and the registry would instantly know the exact location of the household. And that would make it easier for a business to withhold the local income tax and forward it to the correct tax district.